Monday, 29 February 2016

More to rates than just the rate, Mr Palino

Following John Palino’s official announcement that he intends to run again for the Auckland mayoralty, I would describePalino’s pledge to cut rates by 10% over three years as “refreshing.”

The three media favourites have tried to get by on policy-free platitudes about waste cutting and fat trimming. Now a proper contest of ideas can begin.

I myself recognise a two-pronged approach to controlling rates is necessary, and suggest that Palino’s plan will only be successful if he looks beyond the percentage charged on a property’s value.

In January, my Affordable Auckland team announced its policy to freeze rates at their current level for three years. Costing approximately $35 million a year in lost revenue, this is a credible step towards arresting rates growth; it is not however the only step that must be taken.

Under the Local Government Rating Act, councils are required to raise rates revenue by charging property owners a percentage of their property value. It also states that the maximum amount that a council can raise through targeted rates or a uniform annual general charge is 30% of total rates income. This means that even if Palino is successful in his pledge to cut rates, rapidly increasing house values could still see the amount ratepayers are paying increase. Therefore any mayoral candidate wanting to fix the rates issue also needs a plan to fix the housing affordability issue.

The fault for an over-valued housing market can be laid squarely at the feet of those central planners and NIMBYs who strangle housing supply and drive up compliance costs. The Council bans residential development outside of the rural-urban boundary which creates an artificial land shortage and drives up land costs. NIMBY groups like Auckland 2040 organise revolts over heritage, character and intensification, whether the actions of an owner violate somebody else’s property rights or not. In Titirangi, even tree removal work that has been authorised by the Council can face costly delays as property owners are subjected to bullying and harassment by their neighbours.

The process property owners go through to obtain resource consent needs to be streamlined by Council as much as possible within the parameters of the Resource Management Act. Zoning rules must become more flexible, allowing for a greater range of development in the inner city as well as the edge of Auckland. A respect for private property rights should be the overarching concern in decisions about issuing consent for development and alterations. The rule should be: Do what you wish on your property as long as your actions do not violate my right to enjoy my own.

Unless the artificially over-valued state of Auckland’s housing market can be dealt with by increasing supply, making zoning more flexible and respecting private property rights, rates increases resulting from value inflation will trump any other steps taken to control them.

2 comments:

Councils are monopolies, they make their own rules, they have a guaranteed clientele, the rate payer paying them through compulsory rates. Without competition there is no incentive for them to perform. The Council and to some degree the gov't are holding up progress in Auckland. Auckland is constipated,so much energy and initiative being blocked by useless bureaucracy.

We are in fairly big trouble down here in Christchurch, with only 160,000 ratepayers and a dreamy Council, still clinging to the RMA book and its 2000 employees. The roads here will shag any vehicle's springs except a Sherman tank, and NZ Government quietly told us a few months ago we were basically on our own now. The reality of the wasteland here is only now starting to bite in. No worry lets put up the rates and build overseas visitors a Convention Centre, a new Town hall, a renovated Christchurch Council Office, and that Sports Stadium we desperately do not need. .

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